Question

*Please show work and explain*

An investor bought 100 shares of Copier Corp. for $90 a share. The firm paid an annual dividend of $4 a share and commissions on the purchase were $15 and on the sale were another $15. The price of the stock rose to $120 in one year.

What is the percentage return earned on the investment if the stock is bought for cash (i.e., the investor did not use margin)?

Show your answer in percentage terms to two places to the right of the decimal point (e.g., “00.00%). But do not include the percent sign (%). If the correct answer is a negative value, then do include the negative sign (“-“) with your answer.

Answer 1

Return earned on investment	(Net sales + Dividend - Net purchase)/Net purchase
Cost of purchase	(100*90)+15
Cost of purchase	9000+15
Cost of purchase	9015
Cost of sale	(100*120)-15
Cost of sale	12000-15
Cost of sale	11985
Total dividend received	4*100
Total dividend received	400
Return earned on investment	(11985+400-9015)/9015
Return earned on investment	3370/9015
Return earned on investment	37.38%
Thus, return earned on investment is 37.38%